The Holiday Budget and the Currency Exchange Rate

How does the exchange rate affect my budget? All holiday travel is exciting, but if you are planning a trip to another country the excitement can be overwhelming unless you have a travel plan and a budget. A big part of the planning should revolve around the currency exchange market. Understanding and knowing when to exchange currency will reduce the stress of planning the trip and it also helps you develop an accurate travel budget with fewer surprises. Traveling to a country in the European Union is always a fun filled adventure and with the birth of the Euro exchanging money has become less of a nuisance, especially if you are going to visit more than one country on your holiday. Even with all the planning, some travelers wait until the day before to exchange currency and that decision can be an expensive one.

When is the best time to exchange money for my trip?

Some vacation travelers tell horror stories about holidays in other countries. A student on a limited budget travelled to Nepal for the summer and when she arrived at Tribhuyan International Airport in Kathmandu she found the favorable exchange rate between the Dollar and the Nepalese Rupee had dramatically changed due to the Dollar’s devaluation. The exchange merchant at the airport exchanged the student’s $1000 into Rupees but it cost an additional $150. Due to this sudden movement in the currencies, her other purchases for the summer of her dreams were more than she bargained for.

A professional mountain climber from Italy is headed to Nepal to climb the ultimate summit – Mount Everest. He waited until the last minute to exchange money and found that the rate of exchange was completely destroyed by a sudden surge or shock in the value of Rupee, which resulted in a major devaluation of the Euro/Rupee pair and the traveler lost hundreds of Euros in the exchange. Averaging your currency exchanges eliminates the threat of a currency shift that can wreck your budget.

How does averaging work?

When you exchange small amounts of money at different times before the trip, you know how much each exchange costs, which means your budget is more accurate. Averaging protects you from sudden surges in the currency market and eliminates the surprises that can ruin your trip. By using a reliable currency broker instead of a bank that charges a surcharge on each exchange and may not give you a real time rate, or using a credit card rate with a built-in profit for the credit card company, you can average your trades over a period of time and produce a holiday budget that works for you, not against you.

Other travel tips

The best way to carry cash on a trip is in a money belt or a hidden pocket which is out of sight. Hotel safes and other security measures should also be used on the trip to prevent theft of valuables. Common sense and awareness are still your best security tools when you use them.

This article was provided by the experts at ForexTraders.com who wants you to maximize your vacations potential. Please visit our website for more information on the currency market, forex broker reviews, how to learn forex and suggestions how to improve your strategy.